Oil up but posts weekly loss on stock build, trade tensions

22 October, 2018, 13:23 | Author: Corey Lynch
  • A general view of the 4th Iranian Petroleum and Energy Club Congress & Exhibition held in Tehran on Oct. 16 2018

Pressuring prices this week was USA government data showing crude inventories last week climbed 6.5 million barrels, a fourth straight weekly build and nearly triple the amount analysts had forecast.

OPEC's assessment came as Brent crude, the global oil benchmark, fell below the $80-a-barrel threshold for the first time in almost a month on Thursday, after data showed an unexpected rise in U.S. inventories.

Meanwhile, sources previously said that during the sanctions scheme of 2011 by the USA, TÜPRAŞ was able to purchase 3 to 4 cargoes of Iranian crude a month and that they would want to be able to stick to that this time as well instead of completely stopping.

During 2017, Iran was Turkey's top crude oil source, accounting for 11.5 million tons of its total purchases nearing 26 million tons, followed by Iraq and Russian Federation.

Oil prices tumbled in the previous two sessions, after data from the U.S. Energy Information Administration showed a much higher than expected increase in crude inventories last week.

As pointed out over at CNBC, American crude stocks have risen to 6.5 million barrels last week. Meanwhile, President Donald Trump and his top diplomat cautioned against putting the entire U.S. -Saudi relationship at risk over dissident writer Jamal Khashoggi.

Volume was above average on Wednesday, with more than 627,000 USA crude contracts changing hands, compared with a 10-month daily average of about 583,000 contracts.

"We're seeing some buying come back in", said Phil Flynn, an oil market analyst at Price Futures Group in Chicago.

"Assuming that Iranian crude exports will stabilize around 900,000 bpd, one can make a strong case that the peak bullish impact of Iran is in fact already behind us", analysts at JBC Energy said in a report.

"The looming Iranian supply disruption and the conflict between the USA and Saudi Arabia are pushing traders to take a cautious stance at the moment", Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone from Seoul.

Saudi Arabia and Kuwait will flounder to resume oil production from jointly operated fields that produced some 500,000 barrels per day any time soon due to operational differences and increasingly sour political ties, according to sources.

Iran has sent a major cargo of oil to China before the re-imposition of the second round of USA sanctions that will be meant to target the country's oil exports.

Saudi output, however, doesn't reflect the overall picture in OPEC, which increased production from 32.39 million bpd in May to 32.74 million bpd only in September. "That comes after prices dropped sharply on Wednesday as USA crude stockpiles surged more than what the market had expected".

While offering of oil at IRENEX is a pilot plan with its supporters and opponents, if conducted and continues it will definitely change Iran' pattern of crude oil exports and create some big potentials for expansion of the deals and some new financial instruments over this highly-valued export product.



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